G.R. No.

7995 May 31, 1957

ICHONG, Petitioners, vs. HERNANDEZ., Respondents

FACTS:

A law, RA No. 1180 entitled "An Act to Regulate the Retail Business" was enacted with an effect of nationalizing the retail trade
business. The main provisions of the Act are:

1. a prohibition against persons, not citizens of the Philippines, and against associations, partnerships, or
corporations the capital of which are not wholly owned by citizens of the Philippines, from engaging directly or
indirectly in the retail trade;

2. an exception from the above prohibition in favor of aliens actually engaged in said business on May 15, 1954,
who are allowed to continue to engaged therein, unless their licenses are forfeited in accordance with the law,
until their death or voluntary retirement in case of natural persons, and for ten years after the approval of the
Act or until the expiration of term in case of juridical persons;

3. an exception therefrom in favor of citizens and juridical entities of the United States;

4. a provision for the forfeiture of licenses (to engage in the retail business) for violation of the laws on
nationalization, control weights and measures and labor and other laws relating to trade, commerce and
industry;

5. a prohibition against the establishment or opening by aliens actually engaged in the retail business of additional
stores or branches of retail business;

6. a provision requiring aliens actually engaged in the retail business to present for registration with the proper
authorities a verified statement concerning their businesses, giving, among other matters, the nature of the
business, their assets and liabilities and their offices and principal offices of judicial entities; and

7. a provision allowing the heirs of aliens now engaged in the retail business who die, to continue such business for
a period of six months for purposes of liquidation.

Petitioner Inchong, for and in his own behalf and on behalf of other alien resident corporations and partnerships adversely
affected by the provisions of Republic Act. No. 1180, brought this action to obtain a judicial declaration that said Act is
unconstitutional, and to enjoin the Secretary of Finance and all other persons acting under him, particularly city and municipal
treasurers, from enforcing its provisions. Inchong attacks the constitutionality of the Act, contending that: (1) it denies to alien
residents the equal protection of the laws and deprives of their liberty and property without due process of law ; (2) the subject
of the Act is not expressed or comprehended in the title thereof; (3) the Act violates international and treaty obligations of the
Republic of the Philippines; (4) the provisions of the Act against the transmission by aliens of their retail business thru
hereditary succession, and those requiring 100% Filipino capitalization for a corporation or entity to entitle it to engage in the
retail business, violate the spirit of Sections 1 and 5, Article XIII and Section 8 of Article XIV of the Constitution.

In answer, the Solicitor-General and the Fiscal of the City of Manila contend that: (1) the Act was passed in the valid
exercise of the police power of the State, which exercise is authorized in the Constitution in the interest of national economic
survival; (2) the Act has only one subject embraced in the title; (3) no treaty or international obligations are infringed; (4) as
regards hereditary succession, only the form is affected but the value of the property is not impaired, and the institution of
inheritance is only of statutory origin.

ISSUE:

WON RA 1180 is unconstitutional since its exercise violates one’s right to due process and equal protection as guaranteed by
the Constitution

RULING:

NO. The Court finds the enactment of RA 1180 to clearly fall within the scope of police power of the State. It is clear that the
law in question was enacted to remedy a real and actual threat and danger to the national economy posed by alien dominance
and control of retail business and free citizens and country from the said dominance and control.
It has been said the police power is so far - reaching in scope, that it has become almost impossible to limit its sweep. As it
derives its existence from the very existence of the State itself, it does not need to be expressed or defined in its scope; it is said
to be co-extensive with self-protection and survival, and as such it is the most positive and active of all governmental processes,
the most essential, insistent and illimitable. Especially is it so under a modern democratic framework where the demands of
society and of nations have multiplied to almost unimaginable proportions; the field and scope of police power has become
almost boundless, just as the fields of public interest and public welfare have become almost all-embracing and have
transcended human foresight. However, the Constitution has set forth limitations thereof and the most important of these are:
the due process clause and the equal protection clause.

The conflict, therefore, between police power and the guarantees of due process and equal protection of the laws is more
apparent than real. Properly related, the power and the guarantees are supposed to coexist. The balancing is the essence or,
shall it be said, the indispensable means for the attainment of legitimate aspirations of any democratic society. There can be no
absolute power, whoever exercise it, for that would be tyranny. Yet there can neither be absolute liberty, for that would mean
license and anarchy. So the State can deprive persons of life, liberty and property, provided there is due process of law; and
persons may be classified into classes and groups, provided everyone is given the equal protection of the law. The test or
standard, as always, is reason. The police power legislation must be firmly grounded on public interest and welfare, and a
reasonable relation must exist between purposes and means. And if distinction and classification has been made, there must be
a reasonable basis for said distinction.

The best evidence to determine the alien dominance in retail business are the statistics on the retail trade, which put down the
figures in black and white. Between the constitutional convention year (1935), when the fear of alien domination and control of
the retail trade already filled the minds of our leaders with fears and misgivings, and the year of the enactment of the
nationalization of the retail trade act (1954), official statistics unmistakably point out to the ever-increasing dominance and
control by the alien of the retail trade. Statistical figures reveal that in percentage distribution of assets and gross sales, alien
participation has steadily increased during the years. It is true, of course, that Filipinos have the edge in the number of retailers,
but aliens more than make up for the numerical gap through their assets and gross sales which average between six and seven
times those of the very many Filipino retailers.

The Court finds that law does not also violate the equal protection clause of the Constitution because sufficient grounds exist
for the distinction between alien and citizen in the exercise of the occupation regulated, nor the due process of law clause,
because the law is prospective in operation and recognizes the privilege of aliens already engaged in the occupation and
reasonably protects their privilege. The wisdom and efficacy of the law to carry out its objectives appear to us to be plainly
evident — as a matter of fact it seems not only appropriate but actually necessary — and that in any case such matter falls
within the prerogative of the Legislature, with whose power and discretion the Judicial department of the Government may not
interfere.